Cotton Futures Edge Lower

Cotton futures traded near 78 cents per pound after briefly dipping toward 77 cents, with recent price action largely driven by short covering. A stronger U.S. dollar weighed on the market after Federal Reserve officials signaled a hawkish stance, reducing the competitiveness of U.S. cotton in export markets. Weaker crude oil prices also weighed, as cheaper synthetic fibers become more cost-competitive relative to cotton. Meanwhile, crop conditions remained generally favorable, though investors continue to closely monitor weather developments across key U.S. growing regions ahead of July, with excessive rainfall in some areas and drought concerns in others. Certified cotton stocks remain ample, indicating little risk of a delivery squeeze and helping to keep supply concerns in check.

Cotton futures traded above 79 cents per pound, holding close to the highest since early June, as weather concerns in key US growing regions weighed on the supply outlook. While beneficial rainfall was reported along the Texas coast, dry conditions are likely to persist in West Texas. In the meantime, India is expected to receive below-average rainfall over the next two weeks, especially in central and northern regions that could delay planting of summer-sown crops, including cotton. Meanwhile, the June US agricultural supply and demand report pointed to a tighter global cotton balance in 2026/27, with lower beginning and ending stocks and slightly higher consumption. Easing geopolitical tensions also provided support, as lower crude oil prices may reduce costs for textile producers.

Cotton futures traded around 76 cents per pound, holding close to the lowest since early April, mainly pressured by falling oil prices. Renewed hopes of a US–Iran deal weighed on crude prices, boosting polyester appeal and potentially reducing cotton demand. Meanwhile, data from the June US agricultural supply and demand report pointed to a tighter global cotton balance in 2026/27, with lower beginning and ending stocks and slightly higher consumption. World production is forecast to remain stable at 116.04 million bales, while demand rises, led by China. The US cotton balance sheet showed lower beginning and ending stocks, reflecting a 200,000-bale reduction carried over from the previous year. For 2025/26, higher global exports are expected to reduce ending stocks, while world production and consumption remain largely unchanged. Global exports were raised by more than 1%, led by Brazil, the United States, Kazakhstan and Turkey.